West Texas Intermediate Crude is edging lower towards medium-term support at $110/barrel.
Slowing of the decline indicates support and we are likely to see a retracement to test
the new resistance level at $122.
Falling demand, however, as the global economy heads for recession,
should ensure that the retracement is short-lived.

Source: Netdania

The rise in crude oil demand over the last 5 years,
as discussed in last week's newsletter,
is largely due to growth in demand from China.
So far the Chinese economy has withstood the global slow-down,
maintaining GDP growth above 10 percent per year.
The Shanghai Composite index, however,
has fallen more than 60 percent from its 2007 peak
— an indication of what China can expect when the euphoria from the Olympics has faded.
Falling crude oil demand from China would threaten long-term support at $100.

The calculated long term target is $122 - ($145 - $122).
Failure of support would test the 2007 low of $50/barrel.
This remains less than a 50% probability, however.
And hope is not a strategy.

The euro found short-term support at $1.46 and is likely to retrace towards $1.50.
The calculated target is $1.46, that is $1.53 - ($1.60 - $1.53),
but $1.43 remains a more likely long-term support level.

Source: Netdania

The dollar commenced a primary up-trend against the yen
after breaking through resistance at 108.50/109.00.
Expect retracement to test the new support level at 108.50;
respect would confirm the up-trend.

I have drawn two supporting trendlines:
the lower encapsulates all price activity,
while the upper ignores the two downward spikes.
Future respect of the latter would indicate trend strength.

Source: Netdania

The Australian dollar has performed about as well as our Olympic cycling team:
promising much and then crashing badly.
It is now consolidating above a band of support between $0.85 and $0.86.
Retracement would test $0.90,
while failure of support would warn of a test of $0.77.

Source: Netdania

The Aussie found short-term support at 95.
Retracement would be unlikely to reach 100,
while failure of support would test primary support between 88 and 90.

Source: Netdania

The gold standard has one tremendous virtue: the quantity of the money supply,
under the gold standard, is independent of the policies of governments and political parties.
This is its advantage. It is a form of protection against spendthrift governments.